"I believe we could lose General Motors by the end of this month."
So said United Auto Workers president Ron Gettelfinger in testimony before the U.S. Senate today. But does anyone really believe that the General would vanish from this Earth? Wasn't Gettelfinger really saying that we could lose General Motors (and Ford and Chrysler) as we've known them -- big, ponderous, slow to react, arrogant, profligate spenders, burdened with $80 per hour labor costs to build automobiles that people don't want, living on their legacies, historically a golden goose of sorts for the unions, and largely uncompetitive with more innovative, more nimble foreign competitors here in the United States?
The Four Horsemen of the Automotive Apocalypse (aka Gettelfinger and the Big 3 CEOs, a quartet joined in a mutual groveling pact), rode into Washington not in their private jets like they did two weeks ago when pleading for $25 billion. This time, of course, they arrived asking for $34 billion but did so by driving hybrid vehicles produced by their respective companies (yes, it appears that they can learn a lesson but only after having a Gulfstream rammed up their keisters by a mocking public). By all accounts they were a bit more humble this time around. What hadn't changed was the skepticism of members of Congress.
I don't think anyone wants to see these companies collapse and vanish, least of all the politicians who will have to answer to their constituents who work for these companies, the suppliers, the dealers, etc. However, I think people seriously wonder if the same people who helped lead these icons of American industry into this mess actually have any idea how to get them out or if they can be trusted with $34 billion in taxpayer money.
To many, the idea of bankruptcy, preferably a negotiated one, would force the Big Three to undergo a radical overhaul that would result in leaner, more competitive, and more financially viable companies. Maybe not three but perhaps one or two as a result of consolidation but the end result might be a better American car business retooled for the 21st century. The short-term pain for workers and other supporting companies would be undeniable but the long-term benefits to the American car industry and the economy as a whole might be significant.
Talking about this issue with several savvy businesspeople earlier this week, I heard an interesting counter-argument of a sort. Basically, it goes like this -- If this was happening in 2000 when the economy was humming along, you screw the bailout and let the car companies crater into bankruptcy and then rebuild. However, it's questionable if the economy (financially but mostly psychologically) could handle the body blow that would result from the Big Three going bust right now. As a result, we should bail them out under the assumption that they're still going to crater eventually anyway and take our $25...er...$34 billion with them but only after the bailout sustains them long enough for the economy to rebuild some strength to withstand the inevitable tripartite collapse.
As tempting as this is, I'm still more inclined to accept the bad medicine now. Hell, in some people's eyes, the Big Three are as good as bankrupt already! These companies, or some version of them, will probably still exist if they make the move to restructure under the protection and watchful eye of a bankruptcy court or similar Federal watchdog. The economy already feels like a large section of it has been nuked so let's just get the rest of the disaster over with now and then take the opportunity to help the automakers, like other businesses, rebuild themselves into something newer and more viable, while providing the support necessary to help the auto workers weather the change. But the key would be to manage it.
If workers show up at Ford plants around the country next Monday and find them shuttered and the buildings dark, that's what would spark a panic and not a little outrage. However, if the CEOs or more preferably, their replacements, stand up in front of the American people with their new benevolent bankruptcy overlords and explain exactly how they will retool, reposition, and reinvigorate themselves through the process, as well as why consumers should still trust that they should buy American cars that are actually fuel efficient.
If that were to happen, I'd even be inclined to say, "OK, give them the money as long as when they accept the cash with one hand they hand over senior management's resignations and some serious plans to completely overhaul their business, including a pledge never again to make a passenger car that gets less than 45 to 50 miles per gallon." If they do this, perhaps they can avoid visiting the misfortunes that ride along with the Four Horsemen of myth upon the automotive industry of today.